Download Bank Loan Classification and Provisioning Practices in by World Bank PDF

By World Bank

This file experiences personal loan category and provisioning practices in a extensive pattern of nations that change in measurement, position, and point of economic improvement. The survey performed for this publication compares the regulatory ways followed via business and rising economies, and is meant to counterpoint different assets of knowledge that spotlight solely on both commercial or constructing nations. This file information personal loan classifications and provisioning practices winning within the 23 jurisdictions represented within the Basel middle rules Liaison workforce on the finish of 2001. It contains classifications of person and a number of loans, therapy of promises and collateral, financial institution mortgage evaluate procedures, personal loan loss provisioning, tax remedy of personal loan loss provisions, disclosure criteria, and exterior auditors' function.

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The Evolution of principal Banks employs a variety of old proof and reassesses present financial research to argue that the advance of non-profit-maximizing and noncompetitive vital banks to oversee and keep an eye on the industrial banking procedure fulfils an important and normal functionality.

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Extra resources for Bank Loan Classification and Provisioning Practices in Selected Developed and Emerging Countries (World Bank Working Papers)

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New policies are under consideration. Yes Yes, but only for write-offs Yes, but only if legal action for collection has been taken and is in progress Yes Group/Country United Kingdom United Statesa Non-G-10 Argentina Australia Are specific provisions deductible? Provisions on unsecured loans are deductible based on historical pastdue levels. a. a. a. a. a. a. a. a. No No No No Yes Yes, if additional specific provisions required Yes Are other provisions deductible? No No Yes Yes Average ratio of credit losses to loans reduced by 40 percent over the past five years.

The penalties available to supervisors include a variety of disciplinary measures enforceable in accordance with the severity of the offense. If the offense is considered minor, a warning or reprimand is issued. If it is of great importance—especially if it threatens the bank’s financial viability— then the bank’s license could be revoked. Other penalties include fines, excluding the bank’s general provisions from the capital computation (France), ordering revised financial statements to be issued, increasing the required regulatory capital, suspending the bank’s license, and placing the bank under conservatorship.

No Hong Kong India No Korea, Rep. of No Mexico No Russian Federation Yes Saudi Arabia No Singapore No South Africa Spain No Yes WAMU Yes No specific requirements on sovereign risk Local banks have made provisions to counter the potential risks from their exposure to the region’s economies. For foreign banks that operate in Singapore, provisions for country risk are usually subject to the policies of their head offices. For countries classified as highly doubtful, provisions should reach no less than 50 percent in the first year, 75 percent in the second, and 90 percent in the third.